How do you lose £60 million pounds? Down the back of the sofa? At the bookies, a bad investment? We don’t know, but what we do know is that it is missing, gone awol. This is not the first time this has happened. Kent County Council (KCC) passed the responsibility for the lost £142 million in May 2014 onto a former employee who “has since left the organisation.“
This time however, passing the buck is not possible as the person who is responsible for the data is Cath Head, KCC’s Head of Financial Management (pictured). Mrs Head has been dealing with our public face; while we have been doing the analysis of the data; which you can see clearly set out below. We ask a pertinent question.
Is this a case of the Peter Principle? Only you can decide that after you have read the blog.
The total supplier payments in April-17 (1) is about £60 million less than in previous months – see final column below in graph 1.
Three years ago the May 2014 payments dataset was originally published with 15,710 records missing – equating to £140 million (90% by value). On that occasion, after the error was brought to the KCC’s attention, analysis showed that the omissions were distributed more or less evenly across all expenditure categories.
When the April 2017 data are analysed by the Service Description category, there is a £60 million drop ( 95%) in the value of payments to one Service Description category: “Revenue Balance Sheet”. This is slightly offset by the addition for the first time of payments to redacted suppliers (where the names of individuals are concealed to protect their identities).
“Revenue Balance Sheet” expenditure can be further split by Cost Type. Payments to the following cost types within this category: “Holding Account”, “Miscellaneous – Contributions” , “Miscellaneous Other” and “Miscellaneous Cash” are completely omitted in April 2017. And Miscellaneous Cash equals £2.5 million. Alarm bells should be ringing at KCC.
“Holding Account” and “Miscellaneous” cost types
The cost type “Holding Account” is when invoices are entered onto the accounts payable system, the data input staff don’t know which general ledger cost account (or cost type) the expenditure should be assigned to. That is not necessarily a problem provided it is “redistributed” to the correct cost code(s) in due course, and in any event before the invoice is paid. Otherwise there is a clear control weakness, with invoices being paid without KCC really knowing what they were for. If KCC doesn’t know what they are for it suggests insufficient financial controls over this expenditure, even to the point of not being able to confirm that the expenditure is bona fide.
The five cost types containing the word “miscellaneous” are similarly imprecise and also give the impression that payments are being made without finance officers or budget holders understanding what the invoices are for. Over the last 25 months, on average £63.4 million per month has been paid to suppliers where the cost code description is either “Holding Account” or “Miscellaneous” (see table below). That is almost the same amount that total spending fell by in April 2017, and the same amount that is missing from April’s “Holding Account” and “Miscellaneous” Cost Codes. The miscellaneous issue was recently raised with the KCC and assurances were given by Mrs Head that it was now resolved. Clearly it hasn’t been resolved – merely hidden, swept under the carpet.
The top 40 suppliers (out of 753 suppliers) from the four highlighted cost types in the first chart above are shown below. For the most part they comprise schools and Clinical Commissioning Groups. Payments to schools are associated with “Holding Account”, while payments to NHS CCGs are associated with the “Miscellaneous – Contributions” cost code. This suggests that payments to some schools and some CCG’s in Kent have now disappeared and infers they are not being paid, when in fact they are.
What else is still withheld?
Prior to the April 2017 dataset, KCC already had a track record for omitting payment information (e.g. May 2014 – see 1st Graph above). April 2017 was the first month it published credit notes (negative payments – £2.1 million) and the first month it intentionally published payments to redacted suppliers (where the supplier’s name is hidden – £4.1 million). With just one month’s worth of data it isn’t possible to judge whether either of these totals is representative of the monthly average. Councils are required by law to publish both, yet it is only thanks to outside pressure from our public face that KCC has done so – seven years after the open data initiative began. KCC has not yet published amended files to show the complete payment details for previous months. These facts, together with the KCC’s apparent decision to conceal April’s “Miscellaneous” and “Holding Account” payments in April 2017’s dataset, and its decision not to provide explanations for the April changes on the website itself (Local Government Transparency Code s24) give rise to the reasonable and plausible suspicion that other expenditure categories that should have been published may still be concealed. The real annual total of payments that should be published may be several scores of millions more than the public can currently see.
Those who sit on KCC’s Governance & Audit Committee appear to have no idea that £60 million has gone awol. Nor do they appear to have the skills set to get to the bottom of this, so as we said it gives rise to the reasonable and plausible suspicion that other expenditure categories that should have been published may still be concealed and they – our elected responsible members – no nothing about it. Oh and all those payments – £60 million – might not be bona fide.
The Shepwayvox Team